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Labour conference: smugness, In the Black Labour and MEFO bills

September 30, 2012 4 comments

I’m currently 30-odd miles away from this week”s Labour conference, and won’t get there till late on, but already I can smell the smug self-satisfaction:   10 or more points ahead in the polls, a “relatively united” party, according to Jonathan Friedland, and a Tory party in total disarray on two fronts (being shite at economics, being shite at hiding their core elitism).

And nowhere is the smugness greater than in Anthony Painter’s imagined Miliband speech, in which he inadvertently perhaps, gloats about In The Black Labour’s victory over economics: 

Optimism doesn’t require us to shy away from reality, however. In fact, it means we have to face it. That means accepting some hard truths. The deficit will dominate our politics for the remainder of this decade. There is much that we would like to do – cut taxes for the average family, expand social care, child care and invest more in public services – but this may all have to wait. If we find savings or we decide to ask the wealthy to pay more as they can afford more then it will be the deficit not new programmes that takes priority.

Here, the fact that the deficit will take priority over everything else is taken as a given.  Anthony’s side has won, and we can move on to the nice, fluffy stuff  – like pretending that can maintain, even improve services through some mysterious super-reform process (mysterious, at least, to anyone who understands service delivery) and that it needn’t cost a penny more.

All this is a shame, because In the Black Labour’s prescription for Labour is even wronger than it was than when it first appeared a year or so ago, to the acclaim of proper politicians who a) should know better about the substance (i.e. Ed Balls); b) might have noticed that it shouldn’t really become Labour party policy until it’s been looked at by members (remember Refounding Labour?).

In the Black Labour’s political strategy is based, fundamentally, on the premise that the Tories might be right – that the economy might be growing by 2015, and that Labour needs to accept austerity (albeit a slightly different-paced one) as part of the broad economic consensus.  This premise was always stupid, and betrayed a lack of confidence/knowledge in the In the Black Labour grouping, but now we’re firmly into double-dip, with confirmation from every economist in sight that it’s not going to get much better, by 2015, it looks positively cretinous to tie the party to such failure (though I note at least that Ed Balls is trying to free himself in recent days).

But that is not the worst of In the Black Labour.  

The worst is that they fail to see what a gift Labour’s new orthodoxy is to the Right in the longterm.  As I’ve set out (in contentious terms) here, the post-2015 Tory party will not be bound by Osbornomics, and is as likely to reach for a 21st century MEFO bills economic strategy*, as a populist alternative t0 Labour’s 2015-2020 austerity regime, as it is to hold on the (by then) widely discredited notion that supply-side reforms will surely work if only they are rigorous enough.

And we should remember that, while the MEFO strategy was for utterly abhorrent purposes (and required state secrecy to pull off), it was very successful proto-MMT in its own right.

Put simply, In the Black Labour, and the new orthodoxy of fiscal restraint it has engendered (with impressive speed, it has to be said) could be very dangerous for Labour, and the country, in the long run, however appealing it appears to the smug strategists congratulating each other in Manchester this week.  

But that’s what you get when you put clever political strategy before the principles of socialism.

* No, I’m not saying that the 2020 Tory government will be full of Nazis, though I will in a subsequent post be defending aspects of my Gove-is-a-fascist post.  I’m just pointing out far-right social objectives can be brought to bear by non-monetarist economics.

Will Michael Gove become Britain’s first fascist Prime Minister?

September 26, 2012 31 comments

In a new essay for the IPPR’s Juncture, Professor Tim Bale bemoans the demise of the Tory left.  That loss, he says, may make the Conservative party unelectable for a long period, given the electorate’s centrist inclinations:

The Conservative party may have dumped Thatcher in 1990 but it did not dump Thatcherism. Indeed, by 1992 it was well on the way to being the almost fully Thatcherite entity it is today……..

Despite the efforts of a few outspoken (and well-resourced) realists like Lord Ashcroft to provide polling evidence for staying on (or at least near) the centre ground, this cannot and will not happen unless there are enough people within the party itself who are willing to make a positive argument for a different kind of Conservatism to that which currently rules the roost. Ideologically, the Tory left would be ideally placed to fulfil that role. Sadly – and possibly fatally for the party’s chances at the next election and beyond – it is nowhere near strong enough to do so.

I think this analysis is profoundly wrong, based as it is on the entirely invalid assumption that the British electorate will always tend to seek the middle ground.  It’s as though Professor Bale was unaware of that electorate’s huge swing to the right in the late 1970s, when it came under the influence of a powerful narrative which combined an appeal to personal freedom with a populist authoritarian streak (Stuart Hall’s 1979 The Great Moving Right Show remains the best analysis of this discursive framing).

This time around, though, it could be much worse.  I say this particularly because, waiting in the wings for the right opportunity, is Michael Gove, and he is a dangerous, dangerous man.  To be blunt, Michael Gove has the hallmarks of a genuine, emergent fascist – the term used in the historical sense rather than the looser pejorative sense used since the second world war.

Whatever we may think of Margaret Thatcher, she was no fascist.  Certainly, she had a strong Tory authoritarian/traditionalist streak, and was no stranger to the abuse of state power in furtherance of her aims (e.g. the miners), but she knew there were limits to this; she bowed to pressure, for example, when the New Left took her on over Council budgets, only to make good on her intentions through legislative means in the form of the Local Government Finance Act 1988.  Intellectually speaking - though she was no intellectual – her heroes Hayek and Friedman were of the libertarian right, where debate about power and the state tends to be uninformed by real world experience, rather than concerned with how such power is most effectively wielded on behalf of an all-encompassing state.

Michael Gove, on the other hand,  looks to be an entirely different beast altogether - one not just operating in far more politically volatile environment than Thatcher, but one who seems more intellectually driven by the radical tenets of fascism than by the traditions of conservatism.

Of course fascism is a contested term, with no single, generally agreed definition.  Nevertheless, it has a number of interwoven operational features which help distinguish it both from authoritarian Toryism and from Thatcherism:

  • The development of a full-blown ‘decadence’ narrative about modern society, the only remedy for which is strong central control of societal behaviour, and the creation of a mythical golden age, in which people led purer, more selfless lives;
  • An overt willingness to use the power of the state to enforce, through misinformation if necessary, a particular view of how people should be required to conduct ‘non-decadent’ lives;
  • The development of a nationalistic corporatism in which all groups in society are expected to play their centrally ordained parts in the delivery of national objectives.
  • An aversion to the uncertainties created by the market, and a willingness to control the economy ‘in the national interest’
  • A disdain for liberal democratic norms and conventions, which are seen as a sign of a state’s weakness rather than strength and confidence in itself.

Looking at Gove’s record, even over recent months, it is not hard to detect these tendencies in both policy substance and ministerial style.

First, and most obviously, there is his announcement (column 654) that there will be a single examining board for each GCSE/EBacc subject:

In each subject area, only one exam board will offer the new exams. The independent exams regulator will assess all the exams put forward by awarding bodies. The winner will be the board that offers the most ambitious course, benchmarked to the world’s best, informed by academic expertise and capable of both recognising exceptional performance and allowing the overwhelming majority of students to have their work recognised and graded fairly.

Stephen Twigg’s somewhat limp reply focused on Gove’s disregard for parliamentary procedure by ‘pre-announcing’ the plans to the media  – a contempt for democratic convention certainly, but hardly the main point even in these same terms, given that the Education Select Committee have recently warned explicitly against a move to a single exam boards system, on the basis that “the costs, heightened risk and disruption likely to be generated by moving to a single board outweigh the potential benefits”(para. 55).  The much bigger issue, though, is that by moving to single exam boards Gove (or his successor when that time comes) will wield much greater state power over what is and is not examined, and therefore taught; the businesses that run the exam boards will have little choice but to comply with, or willingly second-guess, the requirements of the Secretary of State, or risk losing their contract.

Such a process of co-option of business by the state is, as I’ve suggested, the very essence of fascist national corporatism.  It’s also worth noting that it’s not just the opposite of what the more traditional Tories on the Education Select Committee recommend, but also runs counter to Hayekian doctrine on how open competition reduces the innately malign power of the state.

Hayek’s seminal ‘Denationalisation of Money’ (free pdf) argues that true economic efficiency will come when the power to issue currency is no longer the preserve of the state, and private organisations compete with each other to be offer the most trusted medium of exchange.  Take the word ‘currency’ out of this text, and insert the ‘examination’, and you get precisely the argument that was used by the Select Committee for the continuation of exam board plurality.   Gove, however, is having none of this competition stuff in his domain – he has grander priorities than freedom of trade.

As noted, it’s not just the policy, but the style that gives Gove’s true inclination away.  Take, for example the new guidance to parents on the content of the revamped Key Stage 2 (end of primary school) literacy assessment. I happen to have seen this because my 10-year-old, a fine creative writer for his age, is unlucky enough to be the guinea pig for it, and risks therefore having his creativity deliberately stunted this year as the emphasis shifts from excellence in writing and comprehension to circling adverbs and putting inverted commas in the right place.

In a show of utterly pointless strength, the department has indicated that the standard of handwriting will form part of the assessment alongside grammar and punctuation.  No details have yet been given of precisely what is expected, although the tests will take place just after Easter, but in an an increasingly digital age the idea that it is useful to spend educational resources on ensuring children have a uniform approach to how they write and join up letters can have no reasonable justification.   It is being imposed – clearly with difficulty by the department’s experts - as part of Gove’s grand appeal to a halcyon past.  It is a small part of the emerging aesthetic of this new fascism – order at the expense of creativity, pseudo-tradition at the expense of societal modernity and freedom of expression.

Then, of course, there are the very deliberate lies.

I have covered in detail, both at Though Cowards Flinch and in the Financial Times, the lengths Gove, and the Department of Education at his behest (along with his willing stooge at Ofsted), have knowingly told lies about standards of educational attainment in England.  The important point for our purposes here is not so much the lying – after all, he is not the only minister to have been caught out – but the fact that those lies are, strictly in terms of policy objective, unnecessary.

If Gove simply wanted to improve educational standards, he could seek to do so simply on that the basis that this is, of itself, a good thing to do.  If this were not felt sufficient, he could do so on the basis that standards in England have not risen as fast as in some other countries (although the nature of the PISA data he would use does make this debatable).

But Gove wants more than this.  He and his acolytes are desperate to paint a picture of a once proud nation in terminal decline – a nation which can only be saved from further humiliation at the hands of foreigners through strong leadership of the type that only he can afford us.  In fact, as Chris Cook at the FT has clearly evidenced, exam results have most likely got better because teaching and schools began to get much better around a decade ago (though Cook’s insistence that this was due to Academy status is odd).

But this reality is at odds with the Gove narrative of decline, and inconvenient reality is not going to stand in his way.  That is not the way of the fascist.

Gove has all the makings, then, of a genuine full-blown fascist leader.  And he’s good at it.  In parliament, he plays the demagogue well, and  – in stark comparison to Stephen Twigg but also to Cameron and Osborne. His total disdain for the opposition is effected with a solemnity to which Cameron can only aspire. He comes across as a man amongst (over-priveleged) boys; the public recognise and approve of that.  It may be painful reading, but the approving comments he garners below the line on the many internet comment pieces about him do reflect a genuine admiration for his strength of vision, and his determination to carry it through, to the extent that the setbacks he does suffer such as the Building Schools Future debacle, come to be seen as obstacles ably overcome – mere details for this man of vision.

What makes Gove so dangerous, though, is the particular confluence of this raw populist talent and the political circumstances in which his star is now rising so fast.

First and foremost, there is the increasing likelihood that the Conservative party led by Cameron will be defeated in the 2015 general election  If it is defeated it will be for two main reasons: the failure of austerity economics, a policy cul-de-sac in which it has become inextricably trapped, alongside the increasingly pervasive sense of governmental incompetence, itself stoked by the elitist ‘out of touch’ characteristics of its leading politicians (Gove excluded).

Just as importantly for our analysis, though, is the reason s it will not lose the 2015 election.  It will not lose because of its social illiberal policies, or its increasingly hardened approach to the welfare state.   These policies are, and will remain, relatively popular – hence Labour’s (short-termist) aping of many of them.

But if the Conservatives lose, they will be immediately leaderless, and immediately directionless.  The possibility of a move towards a form of Red Toryism in a bid to outflank Labour’s ‘responsible capitalism’  from the left is no longer realistic, if it ever was, but a continuation of straightforward Thatcherite economic policy will also be impossible, given the abject failure to return the UK to growth.   The Conservatives will enter a period of identity crisis greater than that of 1997, and comparable with that of the Edwardian period when, as EHH Green put its in his magisterial study of the period, the party stumbled into tariff reform as its key (electorally disastrous) policy because “it seemed like a good idea at the time”.

Enter Michael Gove: reluctant leader, saviour of the party, prospective saviour of the nation.  I don’t expect to see Gove striding down Whitehall in jackboots soon, but the danger that he will – at least metaphorically – is real enough.

As noted, the socially illiberal policies Gove instinctively favours as an emergent fascist will still be popular, but he will look and feel like a man better able to implement them than Ed Miliband, however tough Ed plays it.  

Moreover, Gove will be unsullied by association with disastrous economic policy – it is no surprise that he wouldn’t be moved from the education brief – and therefore in a position to develop fascistic state economic intervention as a key policy aim;  effectively this may be the development of a quasi- (let us hope) war economy in which, by default, the importance of the national deficit is set to one side in the pursuit of the wider goal of national salvation – we may even see some form of Modern Monetary Theory brought to bear, though it is unlikely to be termed such.

Within the ranks Conservative party itself, Gove will find plenty of willing acolytes to support him in in his reluctant crusade.  The intellectually impoverished members of the Free Enterprise Group, for example, have already shown what good fascists they might make, using their Britannia Unchained publication to go beyond the bog-standard Thatcherite supply side solutions to economic stagnation (making it easy to hire and fire etc.), for an initial taste of the coming war against the decadence of the British workers.  And the leading light amongst these young fascist wannabees, Liz Truss, has not only been snapped us by Gove for his department, perhaps because she already displays – as her recent  ‘research’ on childcare affordability shows – a notable ability to tell bare-faced lies for the greater cause.  This group, and others within the 2010, will become willing and easy converts to the Gove cause, in the absence of continued Thatcherite leadership within the party.

In such circumstances, it is easy to conceive of a Labour party, which has as yet failed to come up with a genuinely socialist alternative to capitalist crisis management and remains stuck in the (by then) long decade of stagnation, relinquishing power to a suddenly vibrant – but very different – Conservative party led by Gove, in loose alliance with a number of European states experiencing the same trend.  Just as the US Republican party in crisis now seeks salvation in ‘tea party’ politics, in its desperation to fall back on the original dream of American frontiership and self-sufficiency, so may European right-wing parties be tempted to fall back on the old certainties of fascistic government; the old saying that, under Mussolini, at least the trains ran on time, still holds some sway in the popular imagination.

The Labour hierarchy and its opinion formers, at least as yet, see nothing of this.  Those who care about the rise of extremist politics in Britain seem entirely focused on parties and groupings beyond the current mainstream, unable or unwilling to recognise that effective extremism is much more likely to emanate from within the mainstream, given the current political conditions

They forget too easily, perhaps, that 1930s British fascism emanated, at least in part, from within a directionless Labour party. Labour would do well to heed the warnings of its own history, and set about creating a set of policies and institutions which, come what I hope is victory in 2015, will be enough to keep a new, very different, very dangerous Conservative party at bay.  A call for the watering down of capitalism, alongside a Tory-lite attack on our ‘something-for-nothing’ benefits system, is unlikely to be sufficient; Gove can do all that with a lot more panache.

Osborne’s benefits petard

September 18, 2012 1 comment

Jim Pickard has a good piece up at the FT’s Westminster blog on the coming assault on benefit rates:

It’s no surprise that the issue has reared its head again, with the uprating decision due in December. The question is whether the Lib Dems will once again block a freeze in benefits (or shift in uprating from CPI inflation to earnings) or this time let it through – the latter seems likely given the worsening in the fiscal situation.

What Jim doesn’t mention though is the way Osborne presented the decision to stick with benefit uprating linked to CPI inflation, back in his 2011 Autumn statement:

I also want to protect those who are not able to work because of their disabilities and those, who through no fault of their own, have lost jobs and are trying to find work. So I can confirm that we will uprate working age benefits in line with September’s CPI inflation number of 5.2%.

If Osborne does now change track, and cuts the uplift from CPI to earnings (i.e. from 2.9% to 1.5%), the logical conclusion must be that he is no longer interested in “protecting” the people he had such concern for just 12 months ago.

Got that, Labour spokespeople?  Don’t say I don’t make your lives easy.

 

 

 

Categories: General Politics

The Head of Ofsted is a liar

September 3, 2012 2 comments

This morning on the Marr show (from 28 mins 30 secs), the Head of Ofsted Sir Michael Wilshaw defended ‘rigourous’ GCSEs in this way:

Let’s just take reading, and English is the world language, the business language. We know that we’ve fallen from 7th in reading, to 25th in the world.

This is pretty well the same as he said on the BBC six months ago, and it remains as much a lie as it was then.   It is a lie for several now well-established reasons  and Wilshaw must surely be aware of this. 

Simply repeating lies does not make them true.

Sir Michael Wilshaw is a fucking disgrace.  The first act of an incoming Labour Secretary State for Education should be to fire him.

Categories: General Politics

How to make childcare affordable: the Tories won’t listen, but will Labour?

September 1, 2012 3 comments

The other day I made my social enterprise’s submission to the government’s Commission on Childcare.  Set up in June, and due to report in the Autumn, this commission’s task is to:

look at how to improve the affordability and accessibility of childcare for working families, particularly wrap around and holiday care for school age children, and how to reduce burdens on childcare providers, without compromising the safety or quality of provision.

Now, there is a need for properly affordable childcare, and a limited amount of deregulation might help a little around the margin.  But the government is sadly and grossly mistaken if it thinks “cutting red tape” is going to make any serious difference. 

Below are the main bits of my reply to the (woefully inadequate) questions set out in the call for evidence

Some of the early questions require somewhat ‘technical’ responses, but the final section on what actually might be done to make childcare properly affordable may be of more general interest.

It is unlikely that the current government will do anything like this, given its fixation on marginal-at-best ‘supply side’ solutions, but I do hope the Social Impact Bond idea* might be picked up by Labour policy people, and to this end I’ve submitted the same thoughts to IPPR, who are currently working up their own proposals.  Ideally, of course, I’d be properly involved in that project, given that I actually understand childcare, but IPPR doesn’t seem interested. Funny that.

Commission on childcare: call for evidence

Commission question: What wrap around and holiday provision do parents need that they are not currently easily able to access?

Our response: People use childcare if they can a) afford it; b) know their children will enjoy it. The key problem with a lot of holiday provision is, quite simply, that it’s a bit scary for both parent/guardian and child. This is because the economies of scale needed to make it happen mean that children are lumped in with staff who don’t have an understanding of them (never mind a personal development plan) and other children that they don’t know, and expected to make the best of it.

Wraparound care is often not ‘accessible’ for similar reasons. The provider the parent/child trusts/likes going to may only provide the free Nursery Education Grant care, and wraparound care may require a new scary setting as well as travel between.

What barriers exist that make it more difficult to provide high quality and affordable wrap around and holiday care for children, particularly those aged five and over? How can these be overcome?

The key barrier to smaller local, quality, affordable care is that it is quite difficult for new providers to enter the market because the economies of scale do not allow a surplus to be returned.

It is well established that the major, private-equity financed providers will not look at any setting which provides less that 50 places, because they cannot turn the profit they need/want. The economics of the childcare industry therefore currently militate against small, school-linked settings, even though these are the most popular/trusted (and often highest quality) settings where they do exist.

Any deregulation should therefore be geared towards the establishment and sustainability of these smaller (often non-profit) settings (see below).

Commission question: What are the main barriers to parents setting up or getting involved in running before and after-school activities and holiday schemes? How might these be addressed?

Our response: a) The support provided by local authorities is often quite generic, and while helpful as an introduction, does not help nascent providers through the ‘hard yards’ of business planning, financing and physical establishment. As set out below, we would like to see a transition to local nursery trade associations tasked with this kind of development work.

Commission question: What role can schools play to help parents access the before and after-school and holiday provision they need?

The single biggest help schools might provide is by becoming (via the local authority) the planning applicant in cases where planning approval is needed.

In addition, the commission may wish to recommend that schools be encouraged to adopt more flexible lettings policies to allow pre-school/afterschool provision to benefit from lower rental rates, in consideration of the benefit such services bring to the school.

Commission question: How could existing regulation be improved?

Our response: The obvious answer that will come from many people responding to this consultation is that the child:carer ratios set down by Ofsted need to be relaxed (or even abolished) in favour of providers’ own risk assessments.

We would support a levelling out of the ratios to a certain extent. For example, instead of the current 1:3, 1:4, 1:8 ratios for the different age groups, which create ‘pinch points’ for many providers and lead to either restrictions on provision or lower profit/surplus, it may be more sensible to even the ratios out to say 1:5 for all children, accompanied with a risk assessment/quality assurance process requirement geared towards younger children.

However, the Commission needs to be aware that, if it proceeds down this route, it may end up favouring the bigger providers, at longer term cost to the smaller providers (see above) actually favoured by parents. This is because larger providers will generally have first mover advantage to take advantage of any such relaxation/abolition, given their larger strategic management resources.

In addition, it is worth noting that more unscrupulous providers (of whatever size), who do not meet the ratio requirements on a daily basis anyway (or do so by formally by sleight of staffing figures but not in a way which has carers in contact with children), may be advantaged by a relaxation because it will simply legitimise what they do anyway.

Given this background, and in the interests of the quality provision that the government wants, we would ask that the Commission consider weighting any new ratio requirements towards smaller providers, such that smaller numbers of staff overall are needed pro-rata to bigger providers. This reflects the reality that, in a small setting, all carers know all children’s development needs, such that a slightly lower ratio (and management supervision) might be justified, whereas with larger providers tighter ratios will need to be maintained (a good analogy might be the ratios needed in larger vs smaller medical wards with differing numbers of ‘bays’ for the charge nurse to oversee).

What are the main issues parents face when making decisions about work, either entering work, or increasing their hours, in relation to childcare? Do some families face particular challenges, such as low or middle-income families, or families with disabled children?

Forgive us for stating the obvious, but the main challenge for parents is that childcare is simply too expensive for parents, and makes taking up work/increasing hours either impossible or ‘just not worth it’. Clearly, the less people earn, the greater the challenge is.

With everything else stripped out as having only marginal benefit (see above)), there are two options. People need to be paid more, or childcare needs to cost less. The most practical option in the short term, if the government is not going to promote a wage-driven economic recovery (and the indications are that the government is looking for the opposite), is to reduce childcare prices. We give one relatively bold suggestion on how this might be done below in the ‘final comments’ section.

Commission question: When are the key transition or tipping points, and what are the main issues at those times?

Our response: The key tipping point is clearly where It becomes pointless to go out to work if a large percentage of what is earned is then spent on childcare. There is no exact figure for this as circumstances, and views on what childcare offers in terms of a child’s development, differ, but as a rough guide a family asked to spend on childcare more than 30% of what is earned by one family member may well consider that it is not worth it.

Commission question: What do employers do well and what further role could employers play in supporting parents with their childcare needs?

Our response: What employers do well is employ people. Our fairly simple view is that employers are best focused on running their operations (in private, public and non-profit sectors), and not being given additional responsibility over and above meeting flexible working hours legislation requirements. The rest should be up to providers and government to manage.

Commission question: How do parents access information and support relating to childcare, from local authorities or elsewhere? How could information or support services be improved?

Our response: Parents generally choose their childcare options on the basis of a) word of mouth recommendation; b) links/proximity e.g. next to the school.

Realistically, the need for a county-wide Childcare Information Service is past. It was a good idea in the days e.g. mid/late 90s before widespread access to Google (and childcare settings establishing their own web presence, and while there was a need to find a balance between knowledge about provision in the then new children’s centres and provision elsewhere, but that time has now gone.

The same applies to Childcare Sufficiency Audits, which local authorities must be law provide. This was useful enough as a planning tool when Children’s Centres were being introduced, but they often do not reflect local realities (and, especially in the many areas, like ours, which are close to several county administrative boundaries, they can be a hindrance because they give an inaccurate picture of actual/latent demand).

Our preferred approach would be to redeploy resources currently used to deliver Childcare Information Services and the Sufficiency Assessment towards the establishment and part grant-funding (matched to a small membership fee) of town/city/sub-regional childcare associations, along the lines of the Bristol Association of Neighbourhood Daycare providers (BAND), run under the direction of member organisations, and with a broad strategic remit to facilitate the development of affordable, local childcare, with a particular focus on social enterprise/non-profit operations providing services in locations, and with child numbers, where the main Private Equity-funded providers will not go (see also our comments above). Any surplus from this redeployment of resources should be ploughed directly into provider subsidies along the lines of the Nursery Education Grant (see below for wider views on how to increase subsidy levels without upfront Treasury investment).

Commission question: How effectively is existing government support to help parents participate in work being delivered?

 Our response: Changes to tax credits have not helped in this regard, in our experience.

Commission question: Please use the space below for any other comments you would like to make.

 Our response: As we have sought to set out above, the relatively (and understandably) inflexible nature of the childcare ‘market’, reductions in the cost base of childcare providers of the scale that deregulation can bring will have, at best, a limited impact upon childcare costs as they are met by families. The relative lack of competition in many areas (linked to the difficulty in starting up, especially with smaller scale operations) means that little or none of the cost reductions are likely to be passed on to the consumer.

Certainly any cost reductions passed on to consumers will be of insufficient scale to create the major surge in childcare uptake that the government wishes to see. Our sense of the kind of reduction in costs needed to make this happen needs to be at least more than 30%; even the severest deregulation (and even disregarding the counterproductive effects mentioned above), allied with any (welcome) measures to allow easier access to the provider market for social enterprise, is unlikely to have that kind of impact.

The only realistic way to cut the cost of childcare as radically as the government wishes is through enhanced government subsidies, whereby the provider (as with the Nursery Education Grant) is paid by the government to provide free childcare, or at least at a fee capped to a wholly affordable level under that funding agreement.

This may be unpalatable at a political level, but real progress towards properly affordable childcare for all will only be made when this is recognised.

There are two ways in which these enhanced providers subsidies (a sort of Nursery Education Grant Plus, inclusive of what we currently describe as wraparound provision) can be brought about.

The first, and most obvious route, is for the Treasury simply to fund the cost. That cost would be significant, but not astronomical in relation to the overall budget. Roughly, based on the £2.5million per year currently spent on providing around 1.2 million 3-5 years (and some 2 year olds) with three hours per day for 38 weeks of the year, the government would need to invest a further £4-5bn a year on a subsidy which allowed a) existing free care to be doubled to six hours a day, but across, say, 46 weeks of the year b) that provision to be extended to all 2 year olds, and to allow for significant subsidies for the 6 month to 2 year age group. This would allow most families to work full-time while keeping childcare costs to a relatively small percentage of their expenditure.

It is, however, acknowledged that – while such investment makes good sense in policy terms – direct taxpayer-funded childcare is unlikely to be politically acceptable in the current ‘austerity’ environment.

The alternative, therefore, is for the government to develop and launch a comprehensive Social Impact Bond aimed at both social investors (and in time the wider investment market) and UK Pension Funds.

This would be similar in some ways to the Chancellor’s plan, announced in November 2011 to engage Pension Funds in the delivery of major infrastructure funds, but with the ‘infrastructure’ being child development/family employment rather than bridges, roads and railways.

The plans for funding the latter schemes through Pension Funds appear to have run into the sand , perhaps because it is difficult, in the absence of clear plans for tolling etc., to define the long term revenue streams by which investors would get their returns. A childcare investment bond could, on the other hand, be structured in such a way that – similar to the social impact bonds emerging in other areas like prison rehabilitation – the return to the investor is based on the savings accrued by the Treasury as a result of the provision of high quality, affordable childcare.

Such measures of Treasury savings might include employment levels in local areas as well as savings from lower spending on ‘remedial’ work in primary schools because children/families go into the primary school stage of their lives more able to cope and thrive because of the foundation they have received. (Any such development would also need to be accompanied by a well thought-out workforce strategy, which gradually shifts existing school-based remedial capacity into the more preventative early years environment.

Clearly, this is nothing more than a thumbnail sketch of how a Social Impact Bond for Childcare might work. Much more work would need to be done on working through the practicalities, especially as they relate to measures of savings around which contracts can be drawn up (e.g. between Treasury and Departments) and then ‘payout’ points for investors agreed. Our recommendation to the Affordable Childcare Commission is that it look to commission a further detailed study of how such bonds might be brought into being, looking to external expertise such as offered by think-tanks/research bodies (for example, IPPR are currently working on their own affordable childcare report, and they could be asked to include/add specific consideration of Social Impact Bonds).

This work might include an assessment of whether the development of such a Bond might be subject to the kind of Randomised Control process promoted in the recent Behavioural Insights team document. Such a research process may bring evidence to support the view (explicitly promoted by the Coalition, including by Nick Clegg himself) that high quality early years development ‘interventions’ (to use the somewhat contestable terminology of the Behavioural Insights team) will have a very advantageous cost-benefit ratios.

Such a recommendation is made notwithstanding our view that Randomised Control Trials are only one research methodology, and open to criticism that they prefer internal research rigour over external validity of the findings. Nevertheless, given the government’s rhetorical support such early years intervention, it may be wise to assess effectiveness in this and other ways, rather than risk affordable childcare becoming a ‘must’ in future policy, even at the expense of other potentially more effective ‘interventions’ (and of course the desired outcomes from these interventions will necessarily remain contestable).

 For a fuller review of the potential for Social Impact Bonds (and the constraints) see here.

Categories: General Politics
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